Investors Underestimate Power Of This Pieced Flywheel: Analyst Kicks Off Coverage On CVS Health

As a part of a broader coverage of 15 companies in the Healthcare Services sector, Cantor Fitzgerald initiated coverage on CVS Health Corp CVS with a price target of $87 and an Overweight rating.
Once pieced together, CVS, Signify Health, Oak Street Health Inc OSH, and Carbon (JV) can create a flywheel that brings in industry-leading, consumer-facing technology and ease of access, enhanced brand value across commercial and Medicare, higher NPS (net promoter score), and significantly more opportunities.
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The analyst sees potential for a bull scenario of long-term revenue synergies.
Cantor says adj EPS guided of $9.00 in 2024 and $10.00 in 2025, a 6.6% CAGR off 2022 adjusted baseline of $8.25, assumes low- to mid-single-digit health care benefits and mid-single-digit pharmacy growth, OSH closes in 2023, and SGFY closes in 2Q23 with positive earnings contribution in 2024.
The analyst estimates bull scenario could generate $10.50-$11.00.
Under the leadership of Vijay Patel, the analyst writes that the portfolio could grow to an alpha-generating and self-financing $1 billion portfolio. It says the selections represent an astute recognition of competitive and sustainable advantages.
Price Action: CVS shares are down 0.52% at $72.87 on the last check Friday.

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